(JWR) ---- (http://www.jewishworldreview.com)
PRESIDENT CLINTON and many members of Congress have proposed raising the
minimum wage from its current $5.15 per hour to $6.15. Most academic
economists who've studied the minimum wage conclude that higher minimum
wages cause unemployment, not so much among the general labor force, but
among low-skilled workers, especially teen-agers. Differences in
unemployment rates reflect this: the unemployment rate for adults over 25
years is 3.1 percent; for teenagers it's 14.3 percent.

You say: "Williams, the president and Democrats love America's children. If
the minimum wage hurt them, why would liberals support such a monstrosity?"
First, you have to recognize the reward and punishment structure in
political life. The fact of business is that no congressman or senator owes
his seat to the teen-age vote, but many do owe their seats to the union vote
and other interests that benefit from higher minimum wages. Thus, in the
hurly-burly hardball of political life, you dump on people who can't dump
back on you.

To understand how people can benefit from the minimum wage, let's examine
the general principle of Congress setting minimum prices using a non-labor
example. Businessmen and labor unions frequently belly-ache about foreign
manufacturers charging too low a price for a product. They call on Congress
or the White House to bully foreign manufacturers to raise their produce
prices or they lobby Congress to raise tariffs.

Do you think American businessmen and labor unions want foreign goods to
sell at higher prices because they're concerned about and want to raise the
living standards of foreign producers and their workers? If you think so, I
have a bridge to sell you. Their sole motivation is to set higher minimum
prices on foreign goods so they can get away with charging higher prices for
American-made goods as a means to higher profits and higher wages.
The identical principle explains the union's push for higher minimum wages.
If unions can make part of the labor market less competitive through minimum
wages, they can demand higher wages for their members. Businesses may also
benefit from higher minimum wages.

For example, let's go back several decades and pretend you produced
automatic dishwashing machines. Your salesmen put on a sales pitch, but
restaurant owners say: "Why should we buy your costly machines when we can
hire people to wash dishes for $2.00 per hour? It isn't worth it." You would
benefit from Congress raising the minimum wage to say $4.00 per hour. Why?
It raises the cost of restaurant owners using people to wash dishes. Thus,
they'd have greater financial incentive to buy dishwashing machines from
you.

Supporters preach that minimum wages don't cause unemployment for
low-skilled workers. But ask them why they pushed so hard for Congress to
enact the Welfare-to-Work Tax credit and the Work Opportunity Tax Credit.
Both tax credits have the effect of reducing the employer's wage cost to
low-skilled entry level workers by 35 percent or to $3.33 per hour.

The real problem for low-skilled workers is not that they're underpaid, but
that they're underproductive. The solution is to improve their skills and
education. One of the ways to do this is to have a climate where youngsters
can have early work experiences. The little bit of money a youngster can
earn after school and weekends is nice but not nearly as beneficial as the
lessons learned, such as: proper work attitudes, promptness, and respect for
supervisors.

For youngsters living in dysfunctional homes and attending rotten schools,
a job might be their only chance to learn something that will make them more
valuable workers in the future. I'm glad today's do-gooders weren't around
in the 1940s when I was a
teen.